From Core to Credit: A New Fixed Income Playbook

Core fixed income refers to a portfolio of high-quality, low-risk fixed income securities, such as government bonds and investment-grade corporate bonds. These fixed income securities can offer balance and stability to a well-diversified portfolio through a predictable stream of income, lower volatility than cyclical assets and diversification benefits due to their low or negative correlation with other assets such as equities.

Beyond the more familiar fixed income terrain, opportunities also arise in private credit, offering diversification benefits and the potential for enhanced yields. But opportunity comes with uncertainty and challenges. The global economy, society, and financial markets are undergoing a profound transformation driven by five key structural forces: decarbonization, digitization, deglobalization, destabilization in geopolitics, and demographic aging. Active security selection, diversification, and dynamic asset allocation can help investors navigate these contours and construct resilient, return-focused portfolios.

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